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Credit Acceptance Announces Fourth Quarter And Full Year 2012 Earnings

We use a statistical model to estimate the expected collection rate for each Consumer Loan at the time of assignment.  We continue to evaluate the expected collection rate of each Consumer Loan subsequent to assignment.  Our evaluation becomes more accurate as the Consumer Loans age, as we use actual performance data in our forecast.  By comparing our current expected collection rate for each Consumer Loan with the rate we projected at the time of assignment, we are able to assess the accuracy of our initial forecast.  The following table compares our forecast of Consumer Loan collection rates as of December 31, 2012, with the forecasts as of September 30, 2012, as of December 31, 2011, and at the time of assignment, segmented by year of assignment:

    Forecasted Collection Percentage as of     Variance in Forecasted Collection Percentage from  
 Consumer Loan Assignment Year   December 31,  2012     September 30,  2012     December 31, 2011     Initial Forecast     September 30,  2012     December 31, 2011     Initial Forecast  
2003     73.8 %     73.8 %     73.7 %     72.0 %     0.0 %     0.1 %     1.8 %
2004     73.0 %     73.0 %     73.0 %     73.0 %     0.0 %     0.0 %     0.0 %
2005     73.6 %     73.5 %     73.6 %     74.0 %     0.1 %     0.0 %     -0.4 %
2006     69.9 %     70.0 %     70.0 %     71.4 %     -0.1 %     -0.1 %     -1.5 %
2007     68.0 %     68.1 %     68.1 %     70.7 %     -0.1 %     -0.1 %     -2.7 %
2008     70.3 %     70.3 %     70.0 %     69.7 %     0.0 %     0.3 %     0.6 %
2009     79.5 %     79.5 %     79.4 %     71.9 %     0.0 %     0.1 %     7.6 %
2010     77.3 %     77.2 %     76.8 %     73.6 %     0.1 %     0.5 %     3.7 %
2011     74.1 %     73.7 %     73.2 %     72.5 %     0.4 %     0.9 %     1.6 %
      2012  (1)     72.2 %     71.6 %     --       71.4 %     0.6 %     --       0.8 %

(1)     The forecasted collection rate for 2012 Consumer Loans as of December 31, 2012 includes both Consumer Loans that were in our portfolio as of September 30, 2012 and Consumer Loans assigned during the most recent quarter.  The following table provides forecasted collection rates for each of these segments:

    Forecasted Collection Percentage as of        
 2012 Consumer Loan Assignment Period   December 31, 2012     September 30, 2012     Variance  
January 1, 2012 through September 30, 2012     72.3 %     71.6 %     0.7 %
October 1, 2012 through December 31, 2012     71.8 %     --       --  

Consumer Loans assigned in 2003 and 2009 through 2011 have yielded forecasted collection results materially better than our initial estimates, while Consumer Loans assigned in 2006 and 2007 have yielded forecasted collection results materially worse than our initial estimates.  For all other assignment years presented, actual results have been very close to our initial estimates.  For the three months ended December 31, 2012, forecasted collection rates improved for Consumer Loans assigned in 2011 and 2012 and were generally consistent with expectations at the start of the period for all assignment years presented.  For the year ended December 31, 2012, forecasted collection rates improved for Consumer Loans assigned during 2008 and 2010 through 2012 and were generally consistent with expectations at the start of the period for all other assignment years presented.

Stock quotes in this article: CACC 

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